Following seven years of consecutive expansion in the fastest-growing sector of the UK economy, signs have emerged that growth in British tech has begun to slow.
Business activity in the UK tech sector dropped from 54.4 in the first quarter to 53 in the second, according to a closely-watched industry bellwether index.
Data from KPMG’s UK Tech Monitor today revealed the sector was “signposted” for the second-weakest rate of growth for three-and-a-half years.
A value of 50, which marks no change in growth across the period, has not been recorded since the third quarter of 2012.
KPMG said survey respondents blamed the effect of subdued UK economic conditions on the lack of business activity.
Moreover, uncertainty regarding the UK’s exit from the European Union led to greater risk aversion and cuts to corporate spending, according to those polled, leaving the quarter’s rise in total new orders among the weakest recorded since 2015.
Tech firms reported a moderate increase in sales volume during the quarter, alongside a strong pipeline of product innovation and overseas expansion plans.
Though the rate of job creation in the tech sector surpassed the rest of the British economy, KPMG said the data pointed to the weakest staff hiring plans for two years.
“It is heartening to still see sales volume up and growth in the sector despite it beginning to feel the effects of political and economic uncertainty,” said KPMG vice chair Bernard Brown.
“While it is tempting to sit tight, businesses must act with an entrepreneurial and resilient spirit before we’ll see a significant, positive change in market confidence.”
Main image credit: Matt Alexander, PA